Business Insurance
Although business operations may vary from corporation to corporation, all corporations should protect their interests and purchase adequate insurance. Some insurance policies are mandatory and required by the state while other insurance coverages are necessary to adequately protect the company's interest. When it comes to protecting a company's best interest, companies should not scrimp on insurance protection.
Workers' Compensation Insurance
The minute a corporation hires an employee, it is required to purchase workers' compensation insurance. Workers' comp policies have two sections. Coverage A under the workers' comp policy provides coverage for the employee in the event she is injured as a result of a work related injury or illness. Coverage B protects the employer in the event the employee elects not to accept the payments offered under section A of the policy. An employee who rejects coverage under section A can sue the employer. Section B of the Workers' Comp policy provides legal defense and protection for the employer in such situations.
Disability Insurance
Disability insurance is required in the states of New Jersey, New York, California, Rhode Island, Hawaii and the Commonwealth of Puerto Rico. Disability insurance provides coverage for employees who have sustained disabilities from non-work-related injuries.
Property Insurance
Property insurance protects the corporation's assets. Property insurance covers things like buildings, furniture, fixtures, electronic equipment, production machinery and more. Property coverage is not state-mandated, but it may be contractually required on leased or borrowed property.
Corporations should pay particular attention to the valuation clause on the property policies. The valuation clause sets forth the method for calculating the value of the property at the time of a loss. Replacement cost is the more attractive valuation clause as opposed to actual cash value. Reimbursement for loss based on replacement costs will give the corporation the money it needs to repair or replace the damaged item. Actual cash value is calculated by taking the cost to repair or replace the item minus depreciation. The resulting actual cash value claim check may not be enough to repair or replace the damaged items.
Commercial General Liability Insurance
The Commercial General Liability policy (CGL) protects the corporation from third-party lawsuits. A third-party claim could be a trip and fall in the retail store location or a product liability claim arising out of the use of a product manufactured by the corporation. Commercial liability is in an important coverage to have because one uncovered claim can mean the difference between remaining in business and closing shop
Business Automobile Insurance
If the corporation has vehicles registered in the company name, the company must purchase a business automobile policy. It is also important to train the corporate employees on the nuances and the differences between a business automobile and personal automobile policy. For example, personal automobile policies will pick up the collision damage waiver coverage when renting a car; the business auto policy does not.
